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BERLIN, Germany - VW is hoping a sleek makeover will keep its Golf in the best-selling compact car spot and so help the German brand overtake Toyota and GM as the world sales leader.

However the mid-range vehicle faces an onslaught of competition from cheaper and premium models, just as automakers grapple with an economic slump in Europe and slowing growth in China.

VW has reported record deliveries and higher profits while rivals have struggle. However analysts say the seventh-generation Golf, to be unveiled in Berlin today (Sept 4 2012), may not be enough to keep Europe's biggest automaker on its winning streak.

SLEEKER AND LIGHTER

Stefan Bratzel, head of Germany's Centre of Automotive Management think-tank said: "Success of the new Golf is critical to VW's expansion targets but the new version will be battling in a tough environment."

VW is on course to bump General Motors into the world No.3 ranking this year by sellilng 10-million vehicles by 2018, up from the 8.36-million of 2011, and push past Toyota. The new hatchback will have a range of features intended to lure buyers away from les-expensive products from Hyundai, Skoda and Seat, volume makers such as Peugeot Citroen and Opel, and from Audi and BMW.

Pricing has not yet been announced for the Golf 7, which will be sleeker and more than 100kg lighter than its predecessor, thanks to increased use of ultra-strong steel, making it cheaper to run and cutting emissions.

The 104kW petrol version will produce an average 112g of CO2 per kilometre, complying with European Union targets. It will also be 6cm longer and 1.3cm wider than its predecessor, enlarging the interior to compete more effectively with SUV's and minivans. Luxury buyers might be tempted by the promised higher quality cabin with more screens and driving assistance gadgets to fend off the Mercedes A-Class and BMW 1 Series introduced in 2011.

'NO SYNONYM FOR GROWTH'

However all that might still not be enough to keep the competition at bay. Ferdinand Dudenhoeffer, director of the Centre for Automotive Research
at the University of Duisburg-Essen, pointed to Audi, Skoda and Seat: "The European (compact) market is saturated and the Golf keeps attracting competition, even from within the VW group.

"It is no synonym for future growth."

Research firm IHS Automotive is confident the Golf, with more than 29-million global sales since its 1974 launch as the Beetle's successor, will keep the top spot. Sales will rise 17.3% to 630 000 by 2017, it predicts, followed by Toyota's Prius with an 18.7% gain to 488 000 and Ford's Focus with a 2.4% decline to 443,000.

But there are signs the company is worried. Sister brands Kia and Hyundai are the envy of global rivals such as VW; their top-quality, attractive products have outgrown the market during a severe downturn by offering stylish models at affordable prices backed by savvy - if sometimes risky - promotions and helped by a cheaper currency.

VW views Hyundai as a serious contender. Checking out a Hyundai model at the 2011 Frankfurt auto show, chief executive Martin Winterkorn was caught on camera examining the steering wheel adjustment, and saying: "Nothing rattles... Why can they do it? BMW can't. We can't."

A risk for VW is that it's building its updated bread-and-butter car on a new modular platform that will allow it to enhance parts-sharing among its sister brands. While the new technology aims to make production of 3.5-million small and mid-sized cars 20% cheaper and acce;erate assembly by 30% , the scaling up means any defects could expose VW to the kind of mass recalls that blighted Toyota through 2009-10.

The updated Audi A3 compact, a competitor from within the VW family, will use the same cost-saving architecture yet the Golf is so crucial to VW's success that it is the only model the company builds on four continents.

VW expanded production of the Golf to a new plant in Osnabrueck, Germany in 2011 even as the financial crisis exposed chronic overcapacity elsewhere in Europe, forcing rivals Fiat and Opel to close factories in Sicily and Belgium.

"The Golf has a pre-eminent role at VW because of its high production volumes," VW brand development chief Ulrich Hackenberg said recently. "It's the face of VW."

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